Honeycutt, Smith - Value Driver Analysis


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Honeycutt, Smith - Value Driver Analysis

  1. 1. Value Driver Analysis
  2. 2. What We Know <ul><li>Your Business Is Your Future… </li></ul><ul><li>Most owners want to leave their businesses within next 5-10 years. </li></ul><ul><li>Most owners will never be able to leave their businesses in style. </li></ul><ul><li>Most owners have no plan to grow value or to exit their businesses. </li></ul><ul><li>Most owners work in, not on, their businesses. </li></ul>
  3. 3. The Market Value of Your Business <ul><li>Current M & A Marketplace </li></ul><ul><li>20 percent of businesses are for sale, but only one out of four actually sells. </li></ul><ul><li>Businesses with sales of $10 million per year aren’t much better – only one-third sell. </li></ul><ul><li>Above $10 million per year, the odds improve to 50-50. </li></ul>
  4. 4. Every business owner wants to receive the maximum amount of money in order to accomplish personal, financial, income and estate planning goals. <ul><li>“ Beauty is in the eye of the buyer.” </li></ul>
  5. 5. This Value Driver Analysis will focus on: <ul><li>Identifying your Strategic Objectives </li></ul><ul><li>Determining your current personal and business financial resources </li></ul><ul><li>The specific areas in your business that you need to focus on to close the gap </li></ul>
  6. 6. What to Expect From the Value Driver Report: <ul><ul><li>Personal Financial Needs Projection </li></ul></ul><ul><ul><li>Estimate of Business Value </li></ul></ul><ul><ul><li>Immediate Recommendations to Build Business Value </li></ul></ul><ul><ul><ul><li>Business Structure </li></ul></ul></ul><ul><ul><ul><li>Corporate Strategy </li></ul></ul></ul><ul><ul><ul><li>Process/Systems </li></ul></ul></ul><ul><ul><ul><li>People </li></ul></ul></ul><ul><ul><ul><li>Financial Management </li></ul></ul></ul><ul><ul><ul><li>Performance Review </li></ul></ul></ul><ul><ul><li>Baseline for Ongoing GAP Measurement </li></ul></ul>
  7. 7. Value Driver Analysis Result Example
  8. 8. Choosing your Exit Path - Selling to a Third Party vs. Transferring to Insiders <ul><li>As Yogi Berra said: </li></ul><ul><li>“ You've got to be very careful if you don't know where you're going, because you might not get there.” </li></ul>
  9. 9. <ul><li>Ability to sell and business value are determined by: </li></ul><ul><ul><li>Intrinsic Value: the value drivers. </li></ul></ul><ul><ul><li>Extrinsic Value: the value the market places on the business. </li></ul></ul><ul><ul><li>Effectiveness of the sale process. </li></ul></ul>Third Party Sales – Not Just About the Business “ Making a mountain out of a mole hill”
  10. 10. Promote Value Through Value Drivers <ul><li>Focus on increasing cash flow. </li></ul><ul><li>Develop operating systems that improve sustainability of cash flows. </li></ul><ul><li>Document sustainability of earnings. </li></ul><ul><li>Improve company performance as measured by industry metrics. </li></ul><ul><li>Pay down debt. </li></ul><ul><li>Restructure organization. </li></ul><ul><li>Solidify and diversify customer base. </li></ul><ul><li>Implement strategies to grow the company. </li></ul><ul><li>Develop and protect proprietary technology. </li></ul><ul><li>Build a solid management team and groom a successor. </li></ul>
  11. 11. Ownership Transfer to Insiders <ul><li>“ Making a molehill out of a mountain.” </li></ul>Owners must understand the need to minimize income tax consequences to the buyer and seller by minimizing ownership value of the business.
  12. 12. <ul><li>By completing our Value Driver Analysis, we can establish your course, find ways to build value, and create a plan to exit your business in style. </li></ul>Create Exit Plan Build Value Drivers Create Course Correction
  13. 13. <ul><li>If you see ownership change in your future, we can help you plan towards a successful business exit. </li></ul>Call or visit us online to request a complimentary Value Driver Booklet. Phone 858-200-0900 702-892-9911 Website www.honeycuttsmith.com
  14. 14. <ul><li>Contact Us </li></ul><ul><li>Honeycutt, Smith & Associates 4225 Executive Square Suite 955 La Jolla, CA 92037-9122 </li></ul><ul><li>Phone San Diego: (858) 200-0900 Las Vegas: (702) 892-9911 </li></ul><ul><li>Email Website </li></ul><ul><li>info@honeycuttsmith.com www.honeycuttsmith.com </li></ul>Paul E. Honeycutt, CFP® Practitioner, and Ronald F. Smith, CLU, ChFC are Registered Representatives and Investment Adviser Representatives with/and offering securities and advisory services through Commonwealth Financial Network, member FINRA/SIPC, a Registered Investment Adviser, CA Insurance License No. 0728831, 0688599.  Financial Planning offered through H.S. Financial, Inc. in the States of CA and NV.